New York/Hong Kong: Bitcoin has picked up right where it left off, hitting another record high to close in on $8,000 just days after a plunge of as much as 29% tested the confidence of advocates of the cryptocurrency.
Bitcoin climbed as much as 1.3% to touch a high of $7,994.56 for a fourth day of gains, bouncing back after erasing as much as $38 billion in market capitalization Monday following the cancellation of a technology upgrade known as SegWit2X on 8 November.
While multiple reasons have been cited for the price volatility, one of the more viable is that some investors were switching to alternative coins. Bitcoin cash, an offshoot of bitcoin that includes many of the technical upgrades being debated by developers, had more than doubled in the same period.
“My sense is that today’s rally is driven by a resurgence in interest and viability for the Segwit2x hard fork,” Spencer Bogart, head of research at Blockchain Capital, said in an email. “Despite the fact that it was called off, there is still some group of people that will follow through with the intended fork. As a result, I believe some capital is rotating out of other crypto-assets and into bitcoin to make sure they receive coins on both sides of the fork.”
The main difference between bitcoin and bitcoin cash is the block size—the fundamental units that make up the blockchain at the heart of the cryptocurrency. Bitcoin cash offers a larger block that holds more data, meaning faster and cheaper transactions according to supporters of the new rival.
Those supporters view the size increase as the update bitcoin needed to become a better means of exchange to compete with payment services such as Visa or Master Card. Bitcoin handles about seven transactions a second, compared with around 2,000 for Visa.
This year’s surge comes as the digital currency starts to gain mainstream acceptance as a financial instrument after CME Group Inc., the world’s biggest exchange, said it would start bitcoin futures next month. Swiss structured products houses Vontobel AG and Leonteq Securities AGwill said Thursday they’ll offer separate products that will allow investors to profit if the price of bitcoin tumbles. Bloomberg